If you’re planning on buying your first home a Lifetime ISA is something you should definitely think about using!
You just need to be over 18 and under 40 to open a Lifetime ISA, you might have also heard it being called a LISA!
The way it works is really simple – You can pop up to £4,000 each year into a Lifetime ISA, this is where the magic happens:
- Any interest you earn on your money will be tax free
- The Government will add a 25% bonus on top of your savings, every year
So if you save £4,000 towards buying your first home every year, the Government will add an extra £1,000 to your savings. We call that a mini-miracle!
The only catch is that you can only use the money in your Lifetime ISA (LISA) to buy your first home. If you withdraw it or use it for anything other than buying your first home, you’ll have to pay a 25% withdrawal charge.
How Do You Use The Money In Your Lifetime ISA (LISA) to Buy Your First Home?
So there are only a few rules you need to follow to be able to use your LISA to help buy your first home:
- The property has to costs £450,000 or less
- You can only buy the property at least 12 months after you open the Lifetime ISA
- You have to use a conveyancer or solicitor to act for you in the purchase – the ISA provider will pay the funds directly to them
- You’ve got to buy your house with a mortgage
Can I Buy Your First Home With Someone Else Using Your Lifetime ISA (LISA)?
Yes of course! If the person you are buying with also has a Lifetime ISA, you can both using your savings and Government bonus to buy your first home together.
If they already own another house they will have to pay the 25% withdrawal charge on their Lifetime ISA savings.